Buying in today's market

The most recent stats from OMREB (Okanagan Mainline Real Estate Board) confirm that we are still in a buyer’s market in the Central Okanagan. There definitely feels like there has been some pent-up demand given the COVID-19 situation. It’s been busy the last couple of weeks as more and more buyers seem to be out looking at homes. This will no doubt create more competition for the available properties.

If you are in the market for a home right now or are considering a purchase this spring, here is my tip to increase the odds of you being the successful bidder in a possible multiple-offer situation. By taking these steps you might avoid some of the craziness that could happen this late spring market.

This is my best tip and easiest tip. Get pre-approved for your mortgage financing. Not pre-qualified but a full pre-approval.

Prior to looking for a home or placing an offer, work with your mortgage broker to complete a full mortgage pre-approval. This will include the collecting of all supporting documentation that a lender will require to provide a final approval for your financing. We will advise you of your purchasing budget, review any potential challenges, and ensure you are set to go – other than finding a suitable property.

We can also review the types of properties you are interested in and advise whether there might be any potential financing challenges because of property issues.

If you do all the work upfront, it could prevent your offer from falling apart because you were not able to secure financing for your purchase or possibly losing the property by needing to request an extension to finalize your financing, which the seller may not be prepared to offer because there are backup offers on the property.

The lenders have made some adjustments to their policies and guidelines and even pulled some programs due to COVID-19 so it’s more important than ever to ensure you are pre-approved. It’s an ever changing mortgage market, and lenders along with the mortgage insurers have policy updates occurring almost daily as they adjust to our new environment.

But a word of caution – do not be tempted to place a ‘subject free’ offer. ‘SUBJECT TO SATISFACTORY FINANCING’ is a key clause that needs to be included in every offer. You could be the most well-qualified purchaser in history. Stellar credit, great income and job stability with a significant down payment, but in the end, a lender could still decline your request for financing.

Here’s why: mortgage financing approval not only includes the lender being happy with your qualifications but they must also approve the property. Essentially, it’s a two-step process.

My best advice to you would be to never place a ‘subject free’ offer regardless of what others are recommending and to think long and hard about it unless you have the cash in the bank to cover your purchase in the event that you can’t secure satisfactory financing.

Or have a detailed conversation with your mortgage broker well in advance to place a ‘subject free’ offer. There are some strategies to minimize your risk but an individual conversation would be required.

In our current market, you need to be prepared to be successful, so please give me a call to review your options and get pre-approved.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.